3/25/2013

I told you the other day that, even though the Cyprian parliament had rejected a plan to raid bank deposits, the country basically had no other choice if it wanted to stay in the Eurozone. Just call me Carnac:

Backed by euro zone finance ministers, the plan will spare the Mediterranean island a financial catastrophe by winding down the largely state-owned Popular Bank of Cyprus, also known as Laiki, and shifting deposits below 100,000 euros to the Bank of Cyprus to create a “good bank”.

Deposits above 100,000 euros in both banks, which are not guaranteed under EU law, will be frozen and used to resolve Laiki’s debts and recapitalize Bank of Cyprus, the island’s biggest, through a deposit/equity conversion.

So how big a hit are the depositors going to take if they have accounts over 100,000 Euros? Wellllll, I’d say it’s . . . kinda hefty:

An EU spokesman said no across-the-board levy or tax would be imposed on deposits in Cypriot banks, although the hit on large account holders in the two biggest banks is likely to be far greater than initially planned. A first attempt at a deal last week collapsed when the Cypriot parliament rejected a proposed levy on all deposits.

. . . .

Asked about the level of losses on uninsured depositors in Bank of Cyprus, [a government spokesman] told state radio: “The assessment is that it will be under or around 30 percent.”

Ouch. Almost a third of your cash on deposit over 100,000 Euros, gone. Overnight. Yoink!

Mark my words: there will be a run on Spanish and Italian banks. It’s just a matter of time.

“When the media covers something, it’s important to do basic homework. You can’t just repeat something over and over again until it sounds true. It’s not fair. You know how much trouble we would be in if we did that? If we repeated what one person told us over and over like it was a basic fact? We would be done.”

Is he oblivious to the fact that this is exactly what they do, on a daily basis, to conservatives?